Transperfect Global, Inc. v. Pincus

• Court: Supreme Court of Delaware
• Decided: June 1, 2022
• Docket: 154 167 175, 2021
• Status: Published

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

TRANSPERFECT GLOBAL, INC. § and PHILIP R. SHAWE, § § No. 154, 2021 Respondents Below, § Appellants, § Court Below–Court of Chancery § of the State of Delaware v. § § C.A. Nos. 9700 & 10449 ROBERT PINCUS, § § Movant Below, § Appellee. §

TRANSPERFECT GLOBAL, INC. § and PHILIP R. SHAWE, § § No. 167, 2021 Respondents Below, § Appellants, § Court Below–Court of Chancery § of the State of Delaware v. § § C.A. Nos. 9700 & 10449 ROBERT PINCUS, § § Movant Below, § Appellee. §

TRANSPERFECT GLOBAL, INC. § and PHILIP R. SHAWE, § § No. 175, 2021 Respondents Below, § Appellants, § Court Below–Court of Chancery § of the State of Delaware v. § § C.A. Nos. 9700 & 10449 ROBERT PINCUS, § § Movant Below, § Appellee. § Submitted: May 4, 2022 Decided: June 1, 2022

Before SEITZ, Chief Justice; VALIHURA, VAUGHN, TRAYNOR, and MONTGOMERY-REEVES, Justices, constituting the Court en Banc.

Upon appeal from the Court of Chancery. AFFIRMED IN PART, REVERSED AND VACATED IN PART.

Frank E. Noyes, II, Esquire, OFFIT KURMAN, P.A., Wilmington, Delaware; Adam K. Bult, Esquire, BROWNSTEIN HYATT FARBER SCHRECK, LLP, Las Vegas, Nevada, for Appellant TransPerfect Global, Inc.

Jeremy Eicher, Esquire, EICHER LAW LLC, Wilmington, Delaware; Alan M. Dershowitz, Esquire, Cambridge, Massachusetts, for Appellant Philip R. Shawe.

Jennifer C. Voss, Esquire, Cliff C. Gardner, Esquire, Elisa M.C. Klein, Esquire, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware, for Appellee Robert Pincus.

2 TRAYNOR, Justice:

In 2014, Elizabeth Elting, a co-founder of TransPerfect Global, Inc. (“TPG”

or “the Company”), asked the Court of Chancery to appoint a custodian to sell the

Company because of a hopeless deadlock between Elting and fellow co-founder,

Philip R. Shawe. More than eight years later, Elting has sold her shares to Shawe,

who won a court-ordered auction supervised by Robert B. Pincus, a custodian duly

appointed by the Court of Chancery under 8 Del. C. § 226. The parties executed the

sale agreement (the “SPA”) in November 2017. Although this might have ended the

stalemate between Elting and Shawe, it sparked a new series of conflicts that we are

asked to resolve here.

With Elting cashed out, the contentious relationship between Shawe and

Pincus took center stage. Aside from a brief détente when he won the auction, Shawe

has been—to be charitable—unsupportive of Pincus’s court-mandated role with

TPG. The result has been seemingly endless litigation in Delaware, New York, and

Nevada, millions in contested legal fees, and an inability to agree on any material

aspect of Pincus’s tenure as Custodian, up to and including his discharge. All of this

occurred while Pincus was finishing a small number of post-closing tasks and

attempting to wind-down his custodianship.

This case consolidates three challenges brought by Shawe and TPG to orders

of the Court of Chancery. Each of the issues raised on appeal implicates Pincus’s

3 right to petition the trial court for reimbursement of fees and expenses under the SPA

and various court orders, including its August 13, 2015 Order appointing Pincus as

Custodian (the “Appointment Order”) and its February 15, 2018 Order approving

the sale of Elting’s shares to Shawe (the “Final Order”). Broadly speaking, these

authorities allow Pincus and his advisers to request reasonable reimbursements

related to the custodianship, but the parties disagree bitterly about the operation and

reach of each provision.

Shawe and TPG first challenge the Court of Chancery’s October 17, 2019

order (the “Contempt Order”), which found them both in contempt of an exclusive

jurisdiction provision contained in the Final Order. According to the court, the

contemptuous act was a lawsuit TPG filed in August 2019 against Pincus in Nevada

state court (the “Nevada Action”). We agree that this constituted a violation of the

Final Order and that the Court of Chancery was justified in finding TPG in contempt.

But we reverse the portion of the Contempt Order finding Shawe in contempt

because he was not a plaintiff in the Nevada Action and the trial court did not

specifically determine that he bore personal responsibility for TPG’s conduct.

Shawe owns 99 percent of TPG, but this does not, without more, make him

personally liable for the Company’s violation.

Second, Shawe and TPG appeal the Court of Chancery’s April 14, 2021 order

(the “Discharge Order”), which terminated Pincus’s custodianship. Shawe and TPG

4 argue that the Discharge Order improperly expanded Pincus’s protection from

lawsuits, violating the SPA. We do not accept that the Discharge Order conflicts

with the SPA; in any case, a contract cannot prospectively constrain the Court of

Chancery’s discretionary authority under 8 Del. C. § 226 to manage a custodianship.

Thus, we affirm the Discharge Order.

Third, Shawe and TPG object to the Court of Chancery’s April 30, 2021 Order

(the “2021 Fee Order”) awarding Pincus $3,242,251 in fees and expenses incurred

from May 2019 to December 2020. Subject to the qualification that Shawe is not

personally liable for any of these fees given our reversal of the Contempt Order as

applied to him, we affirm the 2021 Fee Order as free from legal error and a product

of the sound exercise of the trial court’s discretion.

5 I. FACTUAL BACKGROUND

A. The Court of Chancery Appoints Pincus as Custodian to Sell TPG

Elting and Shawe launched TPG from their dorm room in 1992.1 The

Company provides translation, litigation support, and website localization services.

It was previously incorporated in Delaware and is now organized in Nevada.2 As

TPG grew, Elting and Shawe planned to wed, but after Elting called the marriage

off, the co-founders gradually lost any ability to work together.3 Serving as co-

CEOs, they would “harass each other, interfere with the business, and demoralize

the employees.”4 Shawe was often the instigator. On one occasion, he was caught

surveilling Elting’s communications.5 On another, he followed her to Paris by

1 In re Shawe & Elting LLC, 2015 WL 4874733, at *1, (Del. Ch. Aug. 13, 2015), aff’d sub nom. Shawe v. Elting, 157 A.3d 152 (Del. 2017) (Shawe I) (affirming the appointment of Pincus as Custodian). The instant appeal is the fifth time this Court has addressed the custodianship of TPG, see In re Shawe & Elting LLC, 2016 WL 3951339 (Del. Ch. July 20, 2016), aff’d sub nom. Shawe v. Elting, 157 A.3d 142 (Del. 2017) (Shawe II) (ordering Shawe to pay $7.1 million in Elting’s legal fees due to his litigation misconduct); In re TransPerfect Glob., Inc., 2018 WL 904160 (Del. Ch. Feb. 15, 2018), aff’d sub nom. Elting v. Shawe, 185 A.3d 694, 2018 WL 2069065 (Del. May 3, 2018) (TABLE) (Shawe III) (approving the sale of Elting’s shares to Shawe); In re TransPerfect Glob., Inc., 2019 WL 5260362 (Del. Ch. Oct. 17, 2019), appeal dismissed sub nom. TransPerfect Glob., Inc. v. Pincus, 224 A.3d 203, 2019 WL 7369433 (Del. 2019) (TABLE) (Shawe IV). This consolidated appeal might be designated Shawe V, though this does not include various decisions by the Court of Chancery that we have not directly reviewed, nor does it count litigation by Shawe and TPG against Pincus, Elting, and related parties in other forums. See, e.g., Shawe v. Bouchard, 2021 WL 1380598 (D. Del. Apr. 12, 2021); Shawe v. Elting, 126 N.E. 3d 1060 (N.Y. 2019); Shawe v. Pincus, 265 F. Supp. 3d 480 (D. Del. 2017); Shawe v. Potter Anderson & Corroon LLP, 2017 WL 6397342 (D. Del. Dec. 8, 2017). 2 In re TransPerfect Glob., Inc., 2019 WL 5260362, at *8 n.56 (Del. Ch. Oct. 17, 2019) [hereinafter Contempt Op., 2019 WL 5260362, at *__]. 3 Shawe I, 157 A.3d at 157. 4 Id. 5 Id. at 156.

6 “arrang[ing] to be seated next to her without her knowledge” on a commercial flight

from New York.6

In 2014, Elting threw up her hands and sought relief from the Court of

Chancery. At that point, TPG was controlled evenly—or not at all—by Elting and

Shawe, who each held one director seat.7 Elting owned 50 shares of TPG, Shawe

owned 49, and his mother, Shirley Shawe, owned one, which she allowed her son to

control.8 At an impasse, on May 23, 2014, Elting filed a petition under 8 Del.

C. § 226, asking the Court of Chancery to appoint a custodian to sell TPG because

the governance of the company was deadlocked.9 After twelve hearings, sixteen

motions, and a six-day trial, the court asked Pincus to mediate Elting’s and Shawe’s

disputes.10 When mediation failed, the court issued the Appointment Order, naming

Pincus the Custodian of TPG to oversee a sale of the Company.11 The court also

named Pincus as the third director of TPG and instructed him to break ties on critical

board-level business decisions.12 Shawe appealed Pincus’s appointment, and we

affirmed in Shawe I.13

6 Id. at 157. 7 Id. at 156. 8 Id. at 155–156. Shirley Shawe’s one-percent interest allowed TPG “to claim the benefits of being a majority women-owned business.” Id. 9 Id. at 158. 10 Id.; see Mar. 9, 2015 Order Appointing Pincus as Mediator, App. to Opening Br. at A743 [hereinafter A____]. 11 Appointment Order, A749. 12 Shawe I, 2015 WL 4874733, at *32. Director Indemnification Agreement at 1, A753. 13 Shawe I, 157 A.3d at 157.

7 B. Shawe Purchases Elting’s 50-percent Interest in TPG

To sell the Company, Pincus designed a modified-auction process that

allowed both Shawe and Elting to bid for full control, which the court approved in a

July 18, 2016 Order (the “Sale Order”).14 Elting never submitted a competitive

offer.15 Instead, Shawe bid against H.I.G. Middle Market, LLC (“H.I.G.”), which

owned TPG’s top competitor.16 In the final round, H.I.G. slightly outbid Shawe, but

Pincus determined that Shawe would ultimately deliver “with fewer closing

conditions and other better terms while retaining virtually all of the Company’s

employees.”17

On November 9, 2017, Shawe agreed in the SPA to purchase Elting’s 50-

percent ownership in TPG for $385 million in cash, implying an enterprise value of

$770 million.18 Shawe completed the purchase through PRS Capital, a New York

LLC that he controlled as the sole and managing member.19 PRS Capital is now

known as TransPerfect Holdings, LLC.20 Through TransPerfect Holdings, Shawe

14 Sale Order ¶ 1, A766. 15 Shawe III, 2018 WL 904160, at *11. Elting joined a group led by Blackstone, whose “bid simply was not competitive.” Id. (internal quotation marks omitted). 16 Id. at *1. 17 Id. at *12. 18 Id. 19 SPA at 1, A777. 20 TransPerfect Global, Inc. v. Robert B. Pincus, Esq., No. A-19-800185 (Clark Cnty., Nev.), Compl. ¶ 6, A1120 [hereinafter Nev. Compl. ¶ __].

8 owns 99 percent of TPG, and his mother owns one percent.21 Shawe is now the

Company’s sole CEO.22

The Court of Chancery entered the Final Order approving the SPA on

February 15, 2018.23 The Final Order applies to the Court of Chancery civil actions

that have addressed Elting’s petition and Pincus’s custodianship, C.A. Nos. 9700 (In

re TransPerfect Global) and 10449 (Elting v. Shawe and TransPerfect Global).24

The Final Order contains three provisions relevant to the consolidated appeals.

Paragraph 7 entitles Pincus and his law firm, Skadden, Arps, Slate, Meagher & Flom

(“Skadden”) “to judicial immunity and to be indemnified by the Company . . . to the

fullest extent permitted by Law.” It also provides that

fees and expenses incurred by the Custodian or Skadden, Arps, Slate, Meagher & Flom LLP (and its partners and employees) in defending or prosecuting any civil, criminal, administrative or investigative claim, action, suit or proceeding reasonably related to the Custodian’s responsibilities under the Sale Order or this Order, shall be paid by the Company[.]25

21 Shawe was the sole and managing member of PRS Capital LLC when it purchased Elting’s shares. Shawe III, 2018 WL 904160, at *12. TPG’s recent filings in other courts indicate that Shawe owns 99 percent of TransPerfect Holdings and Shirley Shawe owns 1 percent. See Nev. Compl. ¶ 6–7, A1120–21. In turn, TransPerfect Holdings owns 100 percent of TPG, according to these filings. Id. 22 Id. ¶ 7, A1121. 23 Final Order ¶ 2, A925. 24 Id. at 1, A919. 25 Id. ¶ 7, A933–34.

9 Additionally, Paragraph 8 confirms the continued validity of the court’s previous

orders.26 And Paragraph 10 provides that “the Court retains continuing and

exclusive jurisdiction over the parties to the Actions for all matters relating to the

Actions, including the administration, interpretation, effectuation or enforcement of

the Sale Agreement . . . and all orders of the Court[.]”27

We affirmed the Final Order on May 3, 2018.28 Pincus resigned from the

TPG board on May 7 but remained as Custodian to complete certain post-closing

tasks.29

C. Pincus Seeks Fees Directly from TPG

Beginning with his appointment in August 2015, Pincus regularly petitioned

the Court of Chancery to approve reimbursement of his fees and expenses. He did

so by invoking Paragraphs 10 and 11 of the Appointment Order.30 Paragraph 10

provides that “[t]he Custodian shall be compensated at the usual hourly rate he

charges as a partner of Skadden” and “reimbursed for reasonable travel and other

expenses incurred in the performance of his duties.”31 Paragraph 11 allows Pincus

to retain advisors, whose fees “shall be calculated on the same hourly rates charged

26 Id. ¶ 8, A935. 27 Id. ¶ 10, A936. 28 Shawe III, 185 A.3d 694. 29 May 7, 2018 Letter Agreement, A943; Contempt Op., 2019 WL 5260362, at *6; Letter from Custodian to the Hon. Andre G. Bouchard at 2 (May 10, 2018), App. to Answering Br. at B502. 30 Contempt Op., 2019 WL 5260362, at *6 n.36. 31 Appointment Order ¶ 10, A751; see Custodian’s Sept. 2015 Status Rep. at 5, Ch. Dkt. No. 640.

10 by such counsel or advisors to clients represented outside this matter.” 32 After the

sale, Pincus initially exercised his discretion to bill his fees directly to an escrow

fund (the “Escrow”) that was created by the SPA and funded evenly by Shawe and

Elting as a “non-exclusive source of funds” for Pincus’s expenses.33 The court

restated Pincus’s right to recover fees in its Sale and Final Orders.34

For about a year after the sale closed, relative calm prevailed. Pincus sought

fees from the Escrow, and neither Shawe nor TPG objected.35 This all changed for

the worse in May 2019. In his monthly status report, Pincus advised the court that

he intended to begin seeking fees directly from TPG, rather than the Escrow, for bills

related to two lawsuits involving TPG but not Elting.36 In the first lawsuit, Cypress

Partners sued Shawe in New York for his purported failure to pay bills related to

advisory services Cypress provided Shawe during his bid for TPG (the “Cypress

Action”).37 In the second case, TPG sued H.I.G., which had finished second to

32 Appointment Order ¶ 11, A751. 33 Id.; SPA § 2.2, A789. 34 See Sale Order ¶ 14, A770 (“The Custodian shall be compensated at the usual hourly rate he charges [and] reimbursed for reasonable travel and other expenses incurred in the performance of his duties. . . . Any fees and expenses approved by the Court shall be paid promptly by the Company.”); Final Order ¶ 7, A934 (“[F]ees and expenses incurred by the Custodian or Skadden . . . in defending or prosecuting any civil, criminal, administrative or investigative claim, action, suit or proceeding reasonably related to the Custodian’s responsibilities under the Sale Order or this Order, shall be paid by the Company[.]”). 35 See, e.g., May 2018 Order Approving Fees and Expenses at 1, A969. 36 Custodian’s May 2019 Status Rep. at 10, A1003. 37 Cypress Partners LLC v. Shawe and John Does Nos. 1-10, Compl. ¶ 1, A1008.

11 Shawe in the auction, alleging that it had stolen TPG’s trade secrets during the sale

process (the “H.I.G. Action”).38

Pincus cited Paragraph 7 of the Final Order and Paragraph 14 of the Sale Order

as authorities that permitted him to request fees directly from TPG for time spent

“defending or prosecuting” legal actions.39 True to his word, in June and July 2019

he sought $65,203.85 in fees directly from TPG for his work responding to the

Cypress and H.I.G. Actions.40 TPG did not object to these requests, and the court

issued orders approving them (the “2019 Fee Orders”).41

D. TPG Sues Pincus in Nevada

After failing to object in the Court of Chancery, TPG challenged the 2019 Fee

Orders by suing Pincus in Nevada state court on August 13, 2019 (the

aforementioned “Nevada Action”).42 Shawe was not a named plaintiff.43 Invoking

the Appointment Order and the Final Order, TPG’s complaint alleged that it was not

required to indemnify Pincus for his time spent as a witness in the Cypress and H.I.G.

38 TransPerfect Glob.l, Inc. v. Lionbridge Techns., Inc., and H.I.G. Middle Market, LLC, 19-cv- 03283, Compl. ¶ 1, A1019. 39 Custodian’s May 2019 Status Rep. at 10–11 n.7, A1003–04; see Contempt Op., 2019 WL 5260362, at *7. 40 Custodian’s June 2019 Status Rep. at 2, A1107 (“According to the records, as of May 31, 2019, I incurred $58,767.71 in unbilled fees and expenses, primarily related to the two new lawsuits referred to in the May 8th report.”); Custodian’s July 2019 Status Rep. at 2, A1115 (requesting $6,436.14 from TPG and $83,753 in accounting fees from the Escrow). 41 Jun. 28, 2019 Order Approving Fees and Expenses, A1109; July 17, 2019 Order Approving Fees and Expenses, A1117. 42 Nev. Compl. ¶ 1, A1119. The Nevada Action was captioned “TransPerfect Global, Inc. v. Robert B. Pincus, No. A-19-800185-B.” 43 Id. at 1, A1119.

12 Actions.44 The complaint asked the Nevada court to determine “whether TPG has a

duty to indemnify Pincus for the time expended in preparation as a third-party

witness” and alleged that Pincus had breached his fiduciary duties as a director of

TPG.45 It also attached copies of the Appointment Order,46 the Sale Order,47 and the

2019 Fee Orders.48 A week after TPG filed the Nevada Action, Pincus submitted a

new fee petition to the Court of Chancery, and Shawe formally opposed it.49

E. The Court of Chancery Finds TPG and Shawe in Contempt for Violating the Final Order, But Not for Violating the 2019 Fee Orders

Pincus moved the Court of Chancery to find Shawe and TPG in contempt on

August 26, 2019.50 Pincus’s motion asserted that Shawe and TPG violated

Paragraph 10 of the Final Order when TPG filed the Nevada Action outside the Court

of Chancery and violated the 2019 Fee Orders by refusing to pay the awarded fees.51

The motion requested a per diem sanction against TPG and Shawe for each day the

44 Id. ¶ 14–16, A1122. “The Delaware Chancery Court further stated in the [Appointment Order] that TPG was under [an] obligation to indemnify to the fullest extent permitted by law Pincus and Skadden for “fees and expenses incurred by the Custodian and Skadden in defending any civil, criminal, administrative or investigative claim, action, suit or proceeding reasonably related to the Custodian’s responsibilities under the [Appointment Order] . . .” (emphasis added by TPG in the Nevada Complaint). The Nevada Complaint identifies the respective orders by their dates of issue. Id. 45 Id. ¶¶ 46, 52, A1127–28. 46 Id. Ex. 2, A1173. 47 Id. Ex. 3, A1176. 48 Id. Ex. 6, A1213; id. Ex. 7, A1217; id. Ex. 9, A1221. 49 Contempt Op., 2019 WL 5260362, at *8. 50 Custodian’s Mot. for an Order to Show Cause Why TransPerfect Global, Inc. and Philip R. Shawe Should Not Be Held in Contempt, A1319 [hereinafter Custodian’s Mot. for Contempt]. 51 Id. ¶ 8, A1323; id. ¶ 18, A1327.

13 Nevada Action remained pending, a sanctions award covering Pincus’s fees for

litigating the Nevada Action and the contempt motion, and an injunction barring

further suits outside the court’s jurisdiction.52

In response, TPG amended its Nevada Complaint to include a claim under the

Director Indemnification Agreement (the “DIA”), which the parties had executed

when Pincus became custodian.53 The additional claim asserted that the DIA

allowed TPG to sue Pincus in any court of competent jurisdiction.54

i. The Court Finds Shawe and TPG in Contempt of the Final Order

On October 17, 2019, the Court of Chancery issued an opinion and order (the

“Contempt Opinion” and “Contempt Order,” respectively) finding Shawe and TPG

in contempt for violating the Final Order.55 After determining that the parties were

bound by the Final Order and had notice of it, the court held that “the Custodian . . .

has established by clear and convincing evidence that Shawe and TransPerfect

violated paragraph 10 of the Final Order in a meaningful way.”56 The court

explained that “the Nevada action specifically puts at issue[,] and thus deprives this

52 Id. ¶ 21, A1328–29. 53 See DIA § 14N, A761–62. 54 Amd. Nev. Compl. ¶¶ 51, 65, A1527–30. Additionally, on October 7, 2019, TPG moved for summary judgment in the Nevada action, triggering a 10-day deadline for the Custodian to respond. Contempt Op., 2019 WL 5260362, at *9. The Nevada court stayed the action the next day. Id. n.72. 55 Contempt Op., 2019 WL 5260362, at *10; Contempt Order ¶ 1, Ex. A to Opening Br. 56 Contempt Op., 2019 WL 5260362, at *13.

14 court of exclusive jurisdiction over parties to these actions with respect to” the SPA

and the Sale and Final Orders.57 Throughout its analysis, the court discussed TPG

and Shawe collectively and did not find that Shawe directed TPG to file the Nevada

Action.

Along with its contempt findings, the court imposed a fine of $30,000 for each

day the Nevada Action was not dismissed and, as a sanction, ordered Shawe and

TPG to pay the fees incurred by Pincus in litigating the Nevada Action and contempt

motion (the “Contempt Sanction”).58 The court also issued an anti-suit injunction

against Shawe and TPG covering the Nevada Action.59 TPG dismissed the Nevada

Action the day before the fine was to take effect.60

ii. The Court Determines that Shawe and TPG Violated the Fee 2019 Orders but Does Not Find Them in Contempt

Although the court determined that Shawe and TPG had violated the 2019 Fee

Orders by failing to pay Pincus’s bills for June and July 2019—a contested amount

of $65,203.85—it declined to make an additional contempt finding.61 The court

explained that “some practical concerns” related to the fee-request process informed

57 Id. at *11. 58 Contempt Order ¶ 2–4, Ex. A to Opening Br. 59 Id. 60 Not. of Voluntary Dismissal at 2, A2568. 61 Telephonic Rulings on Mot. for Contempt of Fee Orders at 4–5, A2503–04.

15 its decision.62 In response to these concerns, the court made slight modifications to

the fee-petition process in a November 2019 Order (the “Fee Process Order”).63

The Fee Process Order required Pincus to provide additional billing

documentation and also established an objection procedure, subject to language in

Paragraph 3(e) allowing the court to shift fees in the event that a party “acted in bad

faith regarding the fee petition and objection process.”64 Paragraph 3(e) clarified

that any fee-shifting “shall be in addition to, and without prejudice to, the

Custodian’s right to recover such amounts pursuant to the Court’s orders or any other

agreement or entitlement.”65 The Fee Process Order provided that, except for the

additions described above, “this Order does not modify, invalidate or otherwise alter

any provision of the Sale Order [or] the Final Order[.]”66

Shawe and TPG appealed the Contempt Order and the Fee Process Order to

this Court. We declined to hear these interlocutory appeals because they implicated

several open issues, including a monetary award—the Contempt Sanction—that had

62 Id. at 6–8, A2505–07. 63 Fee Process Order, Ex. B to Opening Br. 64 Id. ¶ 3(e), Ex. B to Opening Br. “To the extent that any party is found to have acted in bad faith regarding the fee petition and objection process set forth in Paragraph 3(c) herein, the Court may order that such party pay fees and expenses incurred by the other party or parties in connection with the objection process at issue. For the avoidance of doubt, any such order shall be in addition to, and without prejudice to, the Custodian’s right to recover such amounts pursuant to the Court’s orders or any other agreement or entitlement. Nothing in this Paragraph shall be construed to allow the Custodian a double recovery of fees and expenses, unless the Court otherwise orders.” Id. 65 Id. 66 Id. ¶ 2.

16 not yet been calculated.67 Shortly after we declined to accept the appeals, the

parties—at the Court of Chancery’s request—agreed to mediate their remaining

disputes before former Chancellor Chandler.68 Mediation stalled by November

2020.69

F. The Court of Chancery Discharges Pincus as Custodian and Awards Him $3.2 Million in Fees and Expenses

After mediation failed, the court asked Pincus to petition “for attorneys’ fees

and expenses that were not included in any prior fee petition” and to move for

discharge.70 The court also directed Pincus to answer motions from TPG and Shawe

that demanded that Pincus be held in contempt for failing to timely file fee petitions

and challenged previous fee petitions.71 Pincus answered the motions and provided

a proposed order of discharge on December 15, 2020.72 He then filed petitions that

collectively sought $3,868,363 in fees and expenses for the period spanning May

2019 to December 2020.73

67 Shawe IV, 2019 WL 7369433, at *3. 68 In re TransPerfect Global, Inc., 2021 WL 1711797, at * 16 (Del. Ch. Apr. 30, 2021) [hereinafter Fee Op., 2021 WL 1711797, at *__]. 69 Id. at *17. 70 Letter from the Hon. Andre G. Bouchard at 2, A3702. 71 Id.; see Joint Mot. for an Order to Show Cause Why Pincus and Skadden Should Not Be Held in Contempt and Precluded from Submitting Untimely Fee Petitions at 1–2, A3552–53. 72 Custodian’s Opp. to Mot. for Contempt, A3706; Custodian’s Opp. to Mot. to Preclude Custodian from Recovering Fees and Expenses, A3722; Custodian’s Mot. for Order of Discharge, A3738. 73 See Ex. A to Fee Op. at 1, Ex. D to Opening Br.

17 i. The Court Discharges Pincus

Pincus proposed a 17-paragraph order of discharge. His proposal provided

that he would retain “all of, and not less than all of, the protections” granted to him

by Delaware law and the orders and agreements related to the custodianship.74 The

proposal also sought to provide illustrative examples of these protections “[f]or the

avoidance of doubt[.]”75 One of Pincus’s requests was that the order of discharge

clarify that TPG was required to release all potential claims of liability against him.76

TPG and Shawe argued that this proposal “would revise and override the provisions

of the SPA” as well as prior orders of the Court of Chancery.77 In its place, they

suggested a one-paragraph order terminating the custodianship and providing that

“going forward the Custodian . . . shall retain the same protections and

indemnification rights granted to him under the [SPA], the Sale Order and the Final

Order[.]”78

The Court of Chancery rejected much of Pincus’s proposal but agreed that “a

nuanced discharge order”—rather than the single paragraph proposed by Shawe and

TPG—was “necessary to provide clarity on the terms of discharge.”79 Specifically,

74 Custodian’s Proposed Order of Discharge ¶ 3, A3753. 75 Id. ¶¶ 6–15, A3755–3764. 76 Id. ¶ 15, A3762–63; see Custodian’s Mot. for Discharge at 3, A3740. 77 Joint Opp’n to Mot. for Order of Discharge ¶¶ 1, 4, A3880–3881. 78 Shawe’s and TPG’s Proposed Order of Discharge, A3901. 79 Discharge Op., 2021 WL 1401518, at *1.

18 the court repeated the primary protections of the SPA, Sale Order, and Final Order.80

It also included language requiring TPG to waive all claims against Pincus in his

capacity as Custodian.81

ii. The Court Awards Pincus $3.2 Million in Fees and Expenses

In an order issued on April 30, 2021, and accompanied by a 135-page opinion

(the “2021 Fee Order” and “Fee Opinion,” respectively), the Court of Chancery

awarded Pincus $3,242,251 in fees and expenses for the period spanning May 2019

to December 2020.82 This was approximately 84 percent of the $3,868,363 that

Pincus initially requested.83 The 2021 Fee Order separated the award into three

parts: $1,907,039 to be paid by TPG, $186,291 to be paid by the Escrow funded

evenly by Shawe and Elting, and $1,148,291 to be paid by Shawe and TPG in

fulfillment of the Contempt Sanction issued by the court after TPG filed the Nevada

Action.84

80 Discharge Order ¶ 3, Ex. C to Opening Br. at 11. 81 Id. ¶ 9, Ex. C to Opening Br. at 14–15. 82 2021 Fee Order at 1–2, Ex. D to Opening Br.; Fee Op., 2021 WL 1711797, at *52. 83 Fee Op., 2021 WL 1711797, at *18. After oral argument on this fee motion, Pincus voluntarily withdrew $204,485 in “fees on fees” at the trial court’s suggestion. Id.; Mar. 2, 2021 Oral Arg. Tr. at 138–140 (THE COURT: “I’m going to give you a reaction on one issue concerning fees that gives me some pause, which is the notion of fees on fees. . . . I am not aware that it would be ordinary to bill a client for the administrative work of sending a bill, which is akin to filing a petition, if you will. . . . If you want to carve that out, it might be prudent to do so.”). 84 2021 Fee Order ¶ 4, Ex. D to Opening Br. The 2021 Fee Order also denied Shawe’s and TPG’s motion to find Pincus in contempt for delayed fee petitions, a decision Shawe and TPG do not directly appeal. Id. ¶ 1, Ex. D to Opening Br.

19 In evaluating Pincus’s request, the court conducted an exhaustive analysis of

his submissions and the related objections from Shawe and TPG. In at least six

areas, it rejected or reduced Pincus’s fees.85 After working through the manifold

objections lodged by Shawe and TPG, the court concluded that the $3.2 million

award was reasonable under Rule 1.5(a) of the Delaware Lawyers’ Rules of

Professional Conduct.86 The court required Shawe and TPG to pay Pincus by May

7, 2021.87 This deadline came and went, but TPG completed the payment in

September 2021 in the face of another contempt motion from Pincus.88

II. ANALYSIS

Shawe and TPG bring three claims on appeal.89 First, they challenge the

October 17, 2019 order (again, the “Contempt Order”) and maintain that the trial

court erred by finding each of them in contempt of the Final Order for TPG’s filing

of the Nevada Action. We affirm the Contempt Order as it applies to TPG but hold

85 See Fee Op., 2021 WL 1711797, at *32 (reducing fees for clerical and administrative work); id. at *41 (excluding fees for defending confidentiality motions); id. at *43 (excluding fees for the preparation of billing statements); id. at *44 (excluding fees for the preparation of monthly update letters); id. at *46 (partially excluding fees for preparation of a proposed discharge order); id. at *47–48 (excluding fees for preparation of a settlement offer and reducing fees for a large Westlaw charge). 86 Id. at *48. 87 2021 Fee Order ¶ 4, Ex. D to Opening Br. 88 See Ex. A to Appellants’ Mot. to Supp. the R. at 2–4. The final piece of the payment cleared in October 2021 when it was released from the Escrow. Id. Having reviewed this motion to supplement the record filed by Shawe and TPG, and noting that it is unopposed, the Court hereby GRANTS the motion. 89 Shawe and TPG initially filed three separate appeals. We consolidated the cases on June 29, 2021. Order Consolidating Appeals, TransPerfect Glob., Inc. v. Pincus, Nos. 154, 167, and 175, 2021 (Del. June 25, 2021).

20 that the court erred when it sanctioned Shawe. Second, Shawe and TPG assert that

the April 14, 2021 order (the “Discharge Order”) improperly expanded Pincus’s

protections. We affirm the Discharge Order as a sound exercise of the trial court’s

discretion. Finally, Shawe and TPG appeal the April 30, 2021 order (the “2021 Fee

Order”) and contend that the Court of Chancery abused its discretion by awarding

an unreasonable amount of fees. We disagree and affirm the 2021 Fee Order, subject

to a qualification discussed below. Our reasoning follows.

A. The Court of Chancery Appropriately Found TPG in Contempt for Filing the Nevada Action but Erred in Sanctioning Shawe

The Court of Chancery found Shawe and TPG in contempt for TPG’s filing

of the Nevada Action, which the court determined violated the exclusive jurisdiction

provision—Paragraph 10—of the Final Order.90 This finding had two monetary

consequences: first, TPG had to—and did—dismiss the Nevada Action by a certain

date to avoid a daily fine of $30,000; and second, the court charged Shawe and TPG

with a Contempt Sanction of $1,148,291 in fees payable to Pincus.91 TPG paid the

Contempt Sanction in September 2021, but along with Shawe still contests its

validity.92

90 Contempt Op., 2019 WL 5260362, at *10. 91 2021 Fee Order ¶ 4, Ex. D to Opening Br. 92 See Ex. A to Mot. to Supp. the R. at 1.

21 Civil contempt is a weighty sanction that can be accompanied by a range of

punishments, including fines and imprisonment.93 Court of Chancery Rule 70(b)

authorizes the court to make a contempt finding “[f]or failure . . . to obey or to

perform any order[.]”94 In Gallagher v. Long, we held that “[a] trial judge has broad

discretion to impose sanctions for failure to abide by [court] orders” subject to the

requirement that the “decision to impose sanctions must be just and reasonable.”95

When an asserted violation of a court order is the basis for contempt, the party to be

sanctioned must be bound by the order, have clear notice of it, and nevertheless

violate it in a meaningful way.96 The burden of proof rests with the movant—here,

Pincus—who must “establish[] [the] contemptuous conduct by a preponderance of

the evidence[.]”97 If the movant makes out a prima facie case, “the burden then

93 State ex rel. Buckson v. Mancari, 223 A.2d 81, 82 (Del. 1966); see also Am. Jur. 2d Contempt § 191 (“Incarceration for contempt may be either civil or criminal; the distinguishing factor is whether the incarceration is for a definite period of time, which is the hallmark of criminal contempt, or whether the contemnor may avoid or cut short the incarceration by complying with the court’s directive, which indicates civil contempt.”). 94 Ch. Ct. R. 70(b). 95 Gallagher v. Long, 940 A.2d 945, 2007 WL 3262150, at *2 (Del. 2007) (TABLE) (citing Lehman Cap. v. Lofland, 906 A.2d 122, 131 (Del. 2006)). 96 Trascent Mgmt. Consulting, LLC v. Bouri, 2018 WL 6338996, at *1 (Del. Ch. Dec. 4, 2018); Gallagher, 2007 WL 3262150, at *2; Mother Afr. Union First Colored Methodist Protestant Church v. Conf. of Afr. Union First Colored Methodist Protestant Church, 1992 WL 83518, at *9 (Del. Ch. Apr. 22, 1992), aff’d, 633 A.2d 369, 1993 WL 433524 (Del. 1993) (TABLE) (requiring “clear” and “definite” notice); Dickerson v. Castle, 1991 WL 208467, at *4 (Del. Ch. Oct. 15, 1991) (requiring that a violation be “meaningful” rather than “a mere technical one[.]”). 97 Wilmington Federation of Teachers v. Howell, 374 A.2d 832, 838 (Del. 1977); see also Hurley, 257 A.3d at 1018 & n.32 (explaining the distinction between civil contempt and criminal contempt, the latter of which requires a showing of clear and convincing evidence.). Writing before our decision in Hurley, the Court of Chancery found Shawe and TPG in civil contempt of the Final Order by clear and convincing evidence. Contempt Op., 2019 WL 5260362, at *10. Although we

22 shifts to the contemnors to show why they were unable to comply with the order.”98

After that, the court must make findings of fact and determine whether each party

carried its burden.99 Critically, these fact findings must be specific to each

defendant.100

We review contempt findings for abuse of discretion and respect the court’s

factual determinations unless they are clearly erroneous.101 Our review of claimed

errors of law—including the application of the legal standard for contempt—is de

novo.102 Shawe and TPG argue that contempt was improper because the court’s

orders “did not provide the clear, definite, and specific notice required to issue

restate that the preponderance standard is the appropriate burden for findings of civil contempt, the evidentiary burden does not otherwise affect our analysis in this case. 98 TR Invs., LLC v. Genger, 2009 WL 4696062, at *15 (Del. Ch. Dec. 9, 2009), aff’d, 26 A.3d 180 (Del. 2011); accord Gorman v. Salamone, 2015 WL 4719681, at *9 (Del. Ch. July 31, 2015). 99 TR Invs., 2009 WL 4696062, at *15–16 (“Genger Acted in Contempt of Court By Directing his Agent to Delete Company-Related Documents”); Electr. Workers Pension Tr. Fund of Local Union 58, IBEW v. Gary’s Electr. Serv., 340 F.3d 373, 382–385 (6th Cir. 2003) (holding that after movants meet their initial burden, “the burden of production shifts to [the defendant]” and remanding to the District Court to “make specific findings with respect to whether the parties satisfied their respective burdens.”). 100 Wilson v. United States, 221 U.S. 361, 385 (1911) (holding that corporate officer defendants in contempt actions related to the failure to produce corporate books and records “may demand that any accusation against them individually be established without the aid of their oral testimony or the compulsory production by them of their private papers.”); City of Wilmington v. Gen. Teamsters Loc. Union 326, 321 A.2d 123, 127 (Del. 1974) (“[S]ome nexus must be established between the acts complained of [] and defendants in order to support a finding of contempt.”); Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 833–34 (1994) (“Contempts involving out-of-court disobedience to complex injunctions often require elaborate and reliable factfinding.”); see also 17 Am. Jur. 2d Contempt § 116 (“Generally, to support a finding of civil contempt for violation of a court order, the evidence must establish that . . . the alleged contemnor violated the order[.]”). 101 Hurley, 257 A.3d at 1017. 102 Id. (citing Fink v. State, 817 A.2d 781, 788 (Del. 2003)).

23 sanctions.”103 They also claim that contempt cannot run against Shawe personally

because he did not file the Nevada Action and the court did not find that he directed

TPG to do so.104 Pincus responds that the Final Order clearly barred the Nevada

Action and that “Shawe controls TransPerfect and thus is responsible” for TPG’s

contemptuous conduct.105 We affirm the Contempt Order and Sanction as they apply

to TPG but hold that the Court of Chancery committed legal error when it sanctioned

Shawe without sufficient findings of fact.

i. The Court of Chancery Did Not Err in Finding TPG in Contempt of the Final Order

Paragraph 10 of the Final Order provides that “the Court retains continuing

and exclusive jurisdiction over the parties to the Actions for all matters relating to

the Actions[.]”106 The Court of Chancery found that TPG was in contempt of the

Final Order because it was bound by the order, had notice of it, and meaningfully

violated it by filing the Nevada Action.107 TPG does not contest the notice prong.108

It argues that the Final Order did not forbid the filing of the Nevada Action or even

103 Opening Br. at 32. 104 Id. 105 Id. at 57. 106 Final Order ¶ 10, A936. The Court of Chancery issued this order on February 15, 2018. Id. at 18, A936. TPG does not contest that it filed the Nevada Action against Pincus on August 13, 2019, and that the Final Order was in effect on that date. See Nev. Compl. at 1, A1119. 107 Contempt Op., 2019 WL 5260362, at *13. 108 See id. at *10; Opening Br. at 38 (“TPG did not act pro se. At least half a dozen lawyers researched and advised on the issues, read the different orders, and determined that there was nothing inherently sanctionable about filing the Nevada Action.”).

24 apply to TPG and that the Company had a good-faith basis to file the Nevada Action

under the Director Indemnification Agreement (again, the “DIA”). We disagree and

affirm the trial court’s contempt finding against TPG.

The Final Order’s reservation of “exclusive jurisdiction over the parties to the

Actions for all matters relating to the Actions” clearly proscribed any lawsuit by

TPG against Pincus in any forum except the Court of Chancery. This is because

TPG was a party to both actions covered by the Final Order: In re TransPerfect

Global, Inc. (C.A. No. 9700) and Elting v. Shawe and TransPerfect Global, Inc.

(C.A. No. 10449).109 These captions appear conspicuously at the top of the first page

of the Final Order.110 Moreover, there can be no serious doubt that TPG’s suit

against Pincus was “relat[ed] to the Actions.” TPG’s complaint challenged the

validity of the Court of Chancery’s 2019 Fee Orders, which awarded Pincus

$65,203.85 in fees he requested under provisions in the Sale and Final Orders.111 At

the risk of stating the obvious, Pincus would not have petitioned for these fees had

the court not named him Custodian, so they are clearly related to the actions in the

Court of Chancery.

109 Final Order at 1, A919. TPG’s status as a nominal defendant in C.A. No. 10449 does not change the fact that it was a “party.” See Brookstone Partners Acquisition XVI, LLC v. Tanus, 2012 WL 5868902, at *3 & n.34 (Del. Ch. Nov. 20, 2012) (explaining that “Woodcrafters is not a party to the Texas Action, but is a Nominal Defendant in the Delaware Action.”). 110 Final Order at 1, A919. 111 Jun. 28, 2019 Order Approving Fees and Expenses, A1109; July 17, 2019 Order Approving Fees and Expenses, A1117; Contempt Op., 2019 WL 5260362, at *8 & n.60.

25 TPG also claims that it was not bound by the Final Order because “the Final

Order expressly listed out the parties that were subject to its provisions, and TPG is

not included.”112 For support, TPG cites Paragraph 3 of the Final Order, which

identifies various parties who are required to release claims of liability and does not

include TPG.113 But Paragraph 3 relates to claim releases, not jurisdiction, and does

not purport to override any other provision of the Final Order. Thus, it cannot be

fairly read to negate the plain text of Paragraph 10, which, again, provides that “the

Court retains continuing and exclusive jurisdiction over the parties to the Actions

for all matters relating to the Actions.”114 TPG is a “part[y] to the Actions” and is

bound by Paragraph 10.

TPG seeks refuge from the text of the Final Order by arguing that the Nevada

Action actually sought relief from a different source, the DIA. The Company asserts

that the Nevada Action attacked Pincus’s right to request fees under the DIA, which

included a non-exclusive jurisdiction provision.115 This argument was doomed from

the start because TPG’s original Nevada Complaint did not even mention the DIA;

it did, however, invoke the SPA and the Appointment, Sale, and Final Orders.116

112 Opening Br. at 37 (emphasis removed). 113 Final Order ¶ 3, A926–928. 114 Id. ¶ 10, A936. 115 DIA § 14N, A761–762 (“The Company and Indemnitee hereby (i) agree that any action or proceeding arising out of or in connection with this Agreement may be brought in the Delaware Court of Chancery[.]”). 116 See Nev. Compl., A1119. After Pincus moved for contempt sanctions, TPG amended its Nevada complaint to add a claim under the DIA. See Amd. Nev. Compl. ¶ 65, A1530. But the

26 Additionally, Pincus never requested fees under the DIA, which he would have had

to do in writing to trigger its other provisions. Finally, any notion that the challenged

fees were related to Pincus’s service as a director is undercut by the record, which

includes an email from TPG’s general counsel stating that “Pincus has not been

involved in the Cypress or [H.I.G.] litigation in his capacity as an officer or director

of TransPerfect[.]”117 In sum, the DIA did not provide a valid basis to file the

Nevada Action because it had nothing to do with the 2019 Fee Orders TPG sought

to challenge.

It is clear to us that TPG’s violation was “meaningful” rather than “a mere

technical one[.]”118 TPG does not argue otherwise, and we agree with the trial court

that that the Nevada Action put at issue not only the Final Order, but also various

terms of other orders that the Nevada courts would have needed to interpret in order

to adjudicate the case.119 Thus, we conclude that the Court of Chancery did not err

in determining that the Final Order bound TPG and that the Nevada Action

meaningfully violated the exclusive jurisdiction provision in Paragraph 10. Because

amended complaint still challenges Pincus’s right to seek reimbursement through the orders issued by the Court of Chancery in C.A. Nos. 9700 and 10449. Thus, even if we were to only consider the amended Nevada complaint, it, too, would plainly be “related to the Actions” in violation of Paragraph 10 of the Final Order. See Opening Br. at 43. 117 Email from A. Mimeles to J. Voss, July 22, 2019, A1255. Indeed, the amounts in question were charged for time worked more than eleven months after Pincus resigned from the TPG board. See Contempt Op., 2019 WL 5260362, at *11. 118 Dickerson, 1991 WL 208467, at *4. 119 Contempt Op., 2019 WL 5260362, at *11.

27 TPG does not contest that it had notice of the Final Order when it filed the Nevada

Action, we hold that the Court of Chancery did not abuse its discretion when it found

TPG in contempt.

ii. The Court of Chancery Erred When it Found Shawe in Contempt of the Final Order

Shawe was not a party to the Nevada Action.120 Nevertheless, the Court of

Chancery found him in contempt because “the filing of the Nevada Action violated

paragraph 10 of the Final Order[.]”121 On appeal, Shawe observes that TPG was the

only plaintiff in the Nevada Action and that the Contempt Opinion lacks “any factual

finding sufficient to impute liability onto Shawe for the actions of TPG.”122 Pincus

responds that “Shawe controls TransPerfect and thus is responsible for

TransPerfect’s filing of the Nevada Action.”123 We hold that the Court of Chancery

failed to make the specific, individualized findings of fact that were required to hold

Shawe in civil contempt. Hence, we vacate the finding of contempt against him.

In the Contempt Opinion, the court explained why the Nevada Action was

sanctionable, offering that “TransPerfect sued the Custodian in Nevada state

120 The case was captioned TransPerfect Global, Inc. v. Robert B. Pincus, Esq., and the complaint identified Shawe as a “relevant non-party.” Nev. Compl. ¶ 7, A1121. 121 Contempt Op., 2019 WL 5260362, at *10. 122 Opening Br. at 32, 34; see also Reply Br. at 4 (“[T]he trial court never made any finding of fact to support a finding of contempt against Shawe for having ordered the filing of the Nevada action.”). 123 Answering Br. at 57.

28 court”124 and “the filing of the Nevada Action violated paragraph 10 of the Final

Order.”125 Throughout the Contempt Opinion, the court was careful to distinguish

between Shawe’s conduct and TPG’s conduct, especially as it related to the filing of

the Nevada Action. For example, the court stated that “Shawe advocated for entry

of the Final Order before the Delaware Supreme Court in 2018, and TransPerfect

specifically references the Final Order in the Nevada complaint.”126 The court never

identified a specific action taken by Shawe personally that violated the Final Order,

nor does Pincus point to one in his briefing. Nevertheless, the court found Shawe in

contempt.

This was error. Although contempt is a discretionary power of the Court of

Chancery, sanctions must still comply with the applicable legal standard. The

standard for contempt of a court order is that a party “(1) is bound by an order, (2)

has notice of the order, and (3) nevertheless violates the order.”127 Here, the trial

court had the authority to sanction Shawe under Court of Chancery Rule 70(b), but

to do so it was required to explain how he personally violated the Final Order.

Issuing a contempt order without such a determination misapplied the law.

124 Contempt Op., 2019 WL 5260362, at *8 (emphasis added). 125 Id. at *10. 126 Id. (emphasis added). 127 Trascent Mgmt. Consulting, 2018 WL 6338996, at *1; see Gallagher, 2007 WL 3262150, at *2.

29 We are not announcing a new principle. In fact, the Court of Chancery

embraced the same reasoning when it addressed a similar contempt motion brought

against Shawe and TPG in December 2020 for other purported violations of court

orders. The context for this motion was a legal malpractice lawsuit that TPG filed

against Ross Aronstam Moritz, LLP in New York state court.128 Ross Aronstam

argued that the suit violated claim releases and antisuit covenants in the Sale Order

and exclusive jurisdiction provisions in the Sale and Final Orders.129 The court

observed that TPG was the only named plaintiff in the New York case and that

Shawe was not a party.130 For this and other reasons, it declined to hold Shawe in

contempt, explaining that

[a]lthough it is indisputable that Shawe controls the Company through his 99% ownership of the Company, and although it is hard to imagine given the history of these proceedings that Shawe did not direct the Company to file the New York Action, there is no record before the court that he actually did so.131

For good measure, the court reiterated twice more that Shawe’s involvement in the

New York cases “implicates a question of fact for which there is no record.”132 This

128 Intervenors’ Mot. to Enforce the Orders of the Court and for Contempt ¶ 1, A3793. 129 April 2021 Contempt Op., 2021 WL 1415474, at *5. 130 Id. 131 Id. at *6 (emphasis in original). 132 Id. (“[D]emonstrating that Shawe caused the Company or acted in concert with the Company to initiate or pursue the claims in the New York Action would implicate a question of fact for which there is no record.”).

30 analysis was sound: it correctly insisted upon record evidence that Shawe personally

violated a court order as a predicate for a contempt finding.133

Pincus maintains that the preceding analysis is irrelevant because Shawe

failed to raise this argument below and consequently is barred from raising it in this

Court. This is a fair point. The thrust of Shawe’s personal opposition to Pincus’s

contempt petition below was not that he had no hand in the filing of the Nevada

Action but, rather, that the Nevada Action, as filed (and amended), did not violate

the Final Order.134 To put it differently, Shawe did not explicitly contest what at the

time seemed apparent to all—that he had directed TPG to file the Nevada Action.

Instead, he defended the allegations of contempt on the ground that the filing of the

action did not run afoul of the Final Order. Implicit in this defense was that it didn’t

matter who filed—or directed the filing of—the Nevada Action.

On the other hand, Shawe was not entirely silent on the question of his

personal responsibility for the Nevada Action. For instance, in his opposition below,

he explicitly contended that “Shawe and TPG [were] not in violation of the

circumscribed exclusive jurisdiction provision of the Final Order.” 135 He likewise

133 See, e.g., Wilson, 221 U.S. at 385 (corporate officers facing a contempt motion “may demand that any accusation against them individually be established without the aid of their oral testimony or the compulsory production by them of their private papers.”); City of Wilmington, 321 A.2d at 127 (“[S]ome nexus must be established between the acts complained of [] and defendants in order to support a finding of contempt.”); Bagwell, 512 U.S. at 833–34 (“Contempts involving out-of- court disobedience to complex injunctions often require elaborate and reliable factfinding.”). 134 See, e.g, Shawe Opp’n ¶ 41, A1724–25. 135 Id. ¶ 41, A1724 (emphasis added).

31 argued that Pincus “fail[ed] to meet his high burden to justify the extraordinary

remedy of contempt . . . ,”136 which arguably put Pincus on notice that he would be

held to his burden of proving each element of civil contempt by a preponderance of

the evidence. As discussed above, Pincus failed to do so, because the Court of

Chancery ultimately did not find the specific, individualized facts required to hold

Shawe in contempt.

For present purposes, we will assume—without deciding—that Shawe did not

fairly present this argument in the Court of Chancery and thus deprived the

Chancellor of the opportunity to evaluate it. Nevertheless, we have considered

Shawe’s argument on appeal because, under Rule 8, we may do so if we determine

that “the trial court committed plain error requiring review in the interests of

justice.”137 As we explained in Shawe I:138

When reviewing for plain error, “the error complained of must be so clearly prejudicial to substantial rights as to jeopardize the fairness and integrity of the trial process.”139 “Furthermore, the doctrine of plain error is limited to material defects which are apparent on the face of the record; which are basic, serious and fundamental in their character, and which clearly deprive an accused of a substantial right, or which clearly show manifest injustice.”140

136 Id. 137 Shawe I, 157 A.3d at 168 (citing Smith v. Del. State Univ., 47 A.3d 472, 479 (Del. 2012)). 138 Shawe I, 157 A.3d at 168. 139 Smith, 47 A.3d at 479 (quoting Wainwright v. State, 504 A.2d 1096, 1100 (Del. 1986)). 140 Wainwright, 504 A.2d at 1100.

32 As discussed above, the Court of Chancery’s contempt findings in this case contain

a stark inconsistency: when fairly presented with the relevant arguments in response

to Ross Aronstam’s December 2020 contempt motion, the Chancellor concluded that

he could not hold Shawe in contempt without evidence that Shawe personally filed

or directed the New York lawsuit that violated the Court’s orders.141 This conclusion

was based on the correct principle of law. Recognizing this, we cannot let the

Contempt Order stand against Shawe because doing so would preserve an error that

deprived him of the right to have each of the elements of contempt proved against

him personally and found by the court. Given the seriousness of a civil contempt

sanction, which may be accompanied by large fines and even imprisonment, this

result would be “so clearly prejudicial to substantial rights as to jeopardize the

fairness and integrity of the trial process” and would not, therefore, comport with

the interests of justice.

We hold that to find a corporate officer or shareholder in civil contempt of a

court order, the trial court must specifically determine that the officer or shareholder

bore personal responsibility for the contemptuous conduct. This is consistent with

requirement that, when an asserted violation of a court order is the basis for

contempt, the party to be sanctioned must be bound by the order, have clear notice

141 April 2021 Contempt Op., 2021 WL 1415474, at *6.

33 of it, and nevertheless violate it in a meaningful way.142 As a result, we vacate the

Contempt Order and Sanction only as they apply to Shawe.

B. The Court of Chancery Did Not Abuse Its Discretion by Discharging Pincus Via the Discharge Order

Shawe and TPG next assert that the Discharge Order was unsound because,

when compared to the SPA, it “expand[ed] the scope of claims to be released” and

classified TPG as a releasor.143 We disagree. As discussed in further detail below,

the Court of Chancery has discretionary authority to manage a custodianship.

Hence, we review the Discharge Order for an abuse of discretion and find no abuse

here.

i. The Terms of a Custodian’s Discharge Are Subject to the Court of Chancery’s Sound Discretion

The Court of Chancery’s discretion to supervise receivers and custodians

flows from 8 Del. C. § 226, which governs their appointment. Section 226 provides:

A custodian appointed under this section shall have all the powers and title of a receiver appointed under § 291 of this title, but the authority of the custodian is to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court shall otherwise order[.]

142 Trascent Mgmt. Consulting, 2018 WL 6338996, at *1; see Gallagher, 2007 Wl 3262150, at *2. 143 Opening Br. at 4, 81–82; see also Answering Br. at 72–77; Discharge Op., 2021 WL 1401518, at *1 (“The discharge of a court-appointed custodian, as with the appointment of one, generally rests within the discretion of the appointing court.”).

34 Section 226 refers to Section 291, which similarly imparts discretion to the trial

court. It states that “[t]he powers of the receivers . . . shall continue so long as the

Court shall deem necessary.”144 Thus, as we explained in Giuricich v. Emtrol Corp.,

“under §§ 226 and 291, the Court of Chancery may determine the duration of the

appointment and the specific powers to be conferred on the custodian.”145 Supported

by this sturdy backdrop, in Shawe I we approved the appointment of Pincus as

Custodian and explained that “the remedy to address the deadlock is ultimately

within the Court of Chancery’s discretion.”146

Swimming against the current, Shawe and TPG maintain that the Court of

Chancery enjoyed no discretion to establish the terms of Pincus’s discharge because

the terms were set in stone by the SPA.147 This argument falls flat, for starters,

because by approving the SPA, the trial court did not—and could not—relinquish

its statutory authority to “determine the duration of the appointment and the specific

144 8 Del. C. § 291 (emphasis added). 145 Giuricich v. Emtrol Corp., 449 A.2d 232, 240 (Del. 1982). This discretion is consistent with the Court of Chancery’s equitable authority to establish remedies. Thus, in Jagodzinski v. Silicon Valley Innovation Co., LLC, the Court of Chancery explained that “appointment and discharge of a receiver is ordinarily a matter resting within the sound discretion of the appointing court[.]” 2015 WL 4694095, at *6 (Del. Ch. Aug. 7, 2015) (quoting Ralph Ewing Clark, A Treatise on the Law and Practice of Receivers 1270 (3d ed. 1959)). We have also observed that the Court of Chancery enjoys “broad discretion . . . to fashion such relief as the facts of a given case may dictate[.]” Weinberger v. UOP, Inc., 457 A.2d 701, 715 (Del. 1983). And we have stated that we “defer substantially to the discretion of the trial court in determining the proper remedy[.]” Int’l Telecharge, Inc. v. Bomarko, Inc., 766 A.2d 437, 439 (Del. 2000); Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., 817 A.2d 160, 175 (Del. 2002) (“This Court reviews the Court of Chancery’s fashioning of remedies for abuse of discretion.”). 146 Shawe I, 157 A.3d at 166. 147 Opening Br. at 71–72.

35 powers to be conferred upon the custodian.”148 Put differently, a contract—even if

court-approved—cannot prospectively constrain a court’s existing statutory

powers.149 Helpfully, Section 12.18 of the SPA recognized this principle when it

provided that, “[n]otwithstanding anything to the contrary set forth in this

Agreement, the duties and responsibilities of all parties subject to the Sale Order and

all other orders of the Court . . . shall remain in full force and effect in accordance

with their terms.”150 Applying this text is straightforward: the Discharge Order

controls “[n]otwithstanding anything to the contrary set forth in this Agreement.”151

In sum, the contract that Shawe and TPG seek to invoke expressly recognizes

the primacy of court orders. This is consistent with the Court of Chancery’s

discretionary authority to manage custodianships under 8 Del. C. § 226. We will

therefore review the Discharge Order for an abuse of discretion.

148 Giuricich, 449 A.2d at 240. 149 See, e.g., In re Appraisal of Metromedia Intern. Grp., Inc., 971 A.2d 893, 900 (Del. Ch. 2009) (“[A] valid contract will be enforced unless the contract violates public policy or positive law[.]”). In their Reply Brief, Shawe and TPG make a cursory, late breaking, and completely unsupported argument that the Discharge Order “materially decreas[es] the value of TransPerfect to the buyer after the transaction has closed [and] amounts to an unconstitutional taking.” Reply Br. at 33–34. Shawe and TPG did not articulate this argument in their Opening Brief. It is therefore waived. Sup. Ct. R. 14(b)(vi)(A)(3) (“The merits of any argument that is not raised in the body of the opening brief shall be deemed waived and will not be considered by the Court on appeal.”). 150 SPA § 12.18, A848 (emphasis added). 151 Id.

36 ii. The Court of Chancery Did Not Abuse Its Discretion in Establishing the Terms of Pincus’s Discharge

The Court of Chancery did not abuse its discretion when it established the

terms of Pincus’s discharge through the Discharge Order. An abuse of discretion

occurs “when the trial judge exceeds the bounds of reason in view of the

circumstances and has so ignored recognized rules of law or practice so as to produce

injustice.”152 We have also identified a reversible abuse of discretion “when a

relevant factor that should have been given significant weight is not considered[.]”153

Beyond their attempt to recast this issue as a question of contract law, Shawe and

TPG do not identify a specific abuse of discretion by the trial court.154 Nor do we

see any. As such, we affirm the Discharge Order.

The Court of Chancery issued the Discharge Order after reviewing proposals

from all parties and hearing oral argument. Shawe and TPG proposed a single

paragraph stating that Pincus was discharged “and shall retain the same protections

and indemnification rights granted to him under the Securities Purchase Agreement,

the Sale Order and the Final Order in his individual capacity as he has had in his

capacity as Custodian.”155 Pincus’s proposal was 17 paragraphs and contained

152 Wright, 131 A.3d at 320. 153 Homestore I, 886 A.2d at 506. 154 See Reply Br. at 30–31 (“Indeed, the abuse of discretion standard, as outlined by Pincus, does not apply, as Appellants are not challenging Pincus’ discharge, but rather are challenging the modification of the SPA contained in the discharge order.”). 155 Shawe’s and TPG’s Proposed Order of Discharge at 1, A3901.

37 numerous purported illustrations of his protections “[f]or the avoidance of

doubt[.]”156 One of Pincus’s requests was that TPG be required to release all

potential claims of liability against Pincus.157

The trial court concluded that the single paragraph offered by Shawe and TPG

was “inadequate for the task” and that Pincus’s proposal was “worded in a manner

that could be construed as expanding upon pre-existing protections[.]”158 The court

deleted many of Pincus’s proposed clarifications, but it clarified that TPG was

required to release any claims against Pincus related to his work as Custodian.159

The court explained that this clarification was consistent with the SPA and that the

additional detail was required “[g]iven the lengthy and fractious history of these

actions [and] the numerous (and often frivolous) collateral litigations spawned from

the sale process that have embroiled the Custodian and many others[.]”160

In our view, it was sensible for the trial court to clarify the scope of Pincus’s

protections. This appeal is just one example of the litigation risk Pincus has been

compelled to navigate during his time as Custodian. Because Shawe and TPG have

not identified even a purported abuse of discretion on appeal—and reiterated in their

Reply Brief that they are not attempting to do so—we affirm the Discharge Order.

156 Custodian’s Proposed Order of Discharge ¶¶ 6–15, A3755–63. 157 Id. ¶ 15, A3763. 158 Discharge Op., 2021 WL 1401518, at *1–2. 159 Id. at *3, A5181; Discharge Order ¶ 9, Ex. C to Opening Br. at 15–16. 160 Discharge Op., 2021 WL 1401518, at *1.

38 C. The Court of Chancery Did Not Abuse Its Discretion or Otherwise Err by Awarding Pincus $3.2 Million in Fees and Expenses

Finally, Shawe and TPG argue that the Court of Chancery committed various

errors in the 2021 Fee Order, which awarded Pincus $3,242,251 in fees and expenses

he incurred from May 2019 to December 2020.161 Shawe and TPG divide their

objections into three groups. First, they challenge the $365,127 that the trial court

awarded Pincus for his efforts to enforce the 2019 Fee Orders, which TPG refused

to comply with.162 Second, they assert that $594,793 in fees awarded to Pincus were

not recoverable absent a showing of bad faith, which Pincus never made.163 Third,

they bring eight distinct objections to the reasonableness of the entirety of the

$3,242,251 award, including that the trial court failed to properly apply its own

orders.164

When an award of attorneys’ fees is grounded in a contract or court order, we

review the authorizing provisions de novo.165 If an award is legally permissible,

however, the determination of the appropriate amount is a classic matter for the trial

161 2021 Fee Order ¶ 2, Ex. D to Opening Br.; Fee Op., 2021 WL 1711797, at *48. 162 Opening Br. at 53–58. 163 Id. at 53–54, 58–61. 164 Id. at 53–54, 61–70. 165 Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, 68 A.3d 665, 675 (Del. 2013) (“While we review an award of attorneys’ fees for abuse of discretion, we review the Vice Chancellor’s interpretation of a contractual fee-shifting provision de novo.”) (internal citations omitted); Town of Cheswold v. Central. Del. Bus. Park, 188 A.3d 810, 813, 818 (Del. 2018) (interpreting stipulated court orders “like contracts.”); accord Harley–Davidson, Inc. v. Morris, 19 F.3d 142, 148 (3d Cir. 1994); see also Am. Jur. Mots. § 48 (“[W]here necessary, the proper interpretation of a court order is a matter of law.”).

39 court’s discretion.166 We conduct a highly deferential abuse-of-discretion review by

keeping in mind the non-exhaustive factors of Rule 1.5(a) of the Delaware Lawyers’

Rules of Professional Conduct.167 To prevail on their challenges, Shawe and TPG

“must establish either that the Chancellor failed to assess the reasonableness of the

fees and expenses or that his determination that the fees and expenses were

reasonable was capricious or arbitrary.”168 It is clear that the Court of Chancery

carefully considered Pincus’s requests and the related objections and painstakingly

assessed the reasonableness of the fees and expenses at issue. In our view, the

Court’s award was reasonable and not an abuse of discretion. We therefore affirm

the 2021 Fee Order.

i. The Court of Chancery Did Not Abuse Its Discretion by Awarding Pincus $365,127 Related to the 2019 Fee Orders

Shawe’s and TPG’s first target is the $365,127 that the trial court awarded to

Pincus for fees incurred during his efforts to enforce the 2019 Fee Orders.169 As

discussed above, after TPG failed to pay these bills—which totaled $65,203.85—

166 Scion Breckenridge, 68 A.3d at 675. 167 Mahani v. Edix Media Grp., Inc., 935 A.2d 242, 245–246 (Del. 2007). These factors are “(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent.” Id. at 246. 168 Id. 169 Opening Br. at 54; Fee Op., 2021 WL 1711797, at *40 & n.386.

40 Pincus filed a motion for civil contempt and sanctions to recover them, as well as

the costs of litigating the issue.170 The court declined to make a contempt finding as

to the unpaid fees but explained that Pincus retained the right to seek reimbursement

under the court’s previous orders.171 Accordingly, in his December 15, 2020 Fee

Petition, Pincus requested $425,127 “in connection with disputes over the [2019]

Fee Orders, prior fee petitions, and billing records.”172 Of this amount, the trial court

awarded Pincus $365,127.173 We affirm this award.

Shawe and TPG assert that the court “abused its discretion by finding that

despite successfully defending against Pincus’s Contempt Motion, TPG was

nevertheless responsible for those fees.”174 This argument treats the court’s denial

of Pincus’s contempt motion as to the unpaid fees and costs as the final word on

whether those amounts could be awarded at all.175 The Court of Chancery was

prescient on this point: the order denying the motion explained that, but for changes

not at issue here, it “[did] not modify, invalidate or otherwise alter any provision of

170 Custodian’s Mot. for Contempt ¶ 79, A1351. 171 Fee Process Order at 2, Ex. B to Opening Br. 172 Custodian’s Dec. 15, 2020 Fee Petition at 11, A3779. 173 2021 Fee Op., 2021 WL 1711797, at *40 & n.386. The court overruled the various objections brought by Shawe and TPG against these fees but subtracted $60,000 for work relating to drafting and implementing confidentiality restrictions, which the court found not to be recoverable. Id. Pincus does not cross-appeal this or any other reduction. 174 Opening Br. at 54. 175 Id. at 55.

41 the Sale Order [], the Final Order, the First Order, or any other orders[.]”176 Thus,

the court explicitly preserved Pincus’s right to seek reimbursement under these

orders.177

Shawe and TPG also argue that Pincus should not have been reimbursed for

the approximately $25,000 he billed to allocate his unpaid fees between the Final

Order and the 2019 Fee Orders.178 We agree with the trial court that this split was

required because the Contempt Sanction made Shawe personally liable for fees

related to the Final Order, while the 2019 Fee Orders only bound TPG.179 Thus, an

allocation was required in part to determine the extent of Shawe’s personal liability.

Indeed, this is particularly salient on appeal given our conclusion that the trial court

erred by extending the Contempt Sanction to Shawe.

We conclude that the Court of Chancery did not abuse its discretion when it

awarded Pincus $365,127 in fees and expenses related to his efforts to enforce the

2019 Fee Orders.

176 Fee Process Order ¶ 2, Ex. B to Opening Br. The Fee Process Order required Pincus to furnish additional billing information—at Shawe’s and TPG’s request—and clarified the Contempt Sanction related only to fees incurred by Pincus in connection with “TPG’s and Shawe’s contempt of the Final Order.” Id. ¶¶ 3(a), 7. 177 For example, and as discussed above, Paragraph 14 of the Sale Order provides in pertinent part that “[t]he Custodian shall be compensated at the usual hourly rate he charges [and] reimbursed for reasonable travel and other expenses incurred in the performance of his duties.” Sale Order ¶ 14, A770. Under Paragraph 14, “[a]ny fees and expenses approved by the Court shall be paid promptly by the Company.” Id.; see Contempt Op., 2019 WL 5260362, at *3 & n.36. 178 Opening Br. at 55–56. 179 See, e.g., Jun. 28, 2019 Order Approving Fees and Expenses at 1, A1109 (“[T]he petition is approved and TransPerfect Global, Inc. shall make prompt payment[.]”).

42 ii. The Court of Chancery Did Not Err in Awarding Pincus $594,793 in Fees Related to the Omnibus Objection

Shawe and TPG next attack the Court of Chancery’s award of $594,793 to

Pincus for the fees and expenses he incurred in responding to their 202-page

objection to his fee petitions from May to October 2019 (the “Omnibus

Objection”).180 According to Shawe and TPG, the trial court’s November 2019 Fee

Process Order provides that such fees are only recoverable if the petitioning party

shows that the objections were made in bad faith.181 Because Pincus did not allege

bad faith, the argument goes, none of these fees were validly awarded.182 This

challenge requires us to interpret a court order, so our review is de novo.183 The

Court of Chancery rejected the argument that the Fee Process Order required Pincus

to prove bad faith to recover these fees.184 We agree and affirm the award.

Shawe and TPG urge us to apply Paragraph 3(e) of the Fee Process Order,

which provides:185

To the extent that any party is found to have acted in bad faith regarding the fee petition and objection process set forth in Paragraph 3(c) herein, the Court may order that such party pay fees and expenses incurred by the other

180 Fee Op. at Ex. A, Ex. D to Opening Br.; Omnibus Objection, A2862–3064. Pincus initially sought $605,793 for his response to the Omnibus Objection. Fee Op., 2021 WL 1711797, at *43. The court excluded from this request $11,000—most of which Pincus withdrew voluntarily— relating to the preparation of billing statements. Id. 181 Opening Br. at 58. 182 Id. at 61. 183 Scion Breckenridge, 68 A.3d at 675. 184 Fee Op., 2021 WL 1711797, at *44–45. 185 Fee Process Order ¶ 3(e), Ex. B to Opening Br. at 4 (emphasis added).

43 party or parties in connection with the objection process at issue. For the avoidance of doubt, any such order shall be in addition to, and without prejudice to, the Custodian’s right to recover such amounts pursuant to the Court’s orders or any other agreement or entitlement. Nothing in this paragraph shall be construed to allow the Custodian a double recovery of fees and expenses, unless the Court otherwise orders.

The underlined language—unhelpfully omitted by Shawe and TPG in their

briefing—clearly provides that that the court’s authority to order bad-faith fee-

shifting “shall be in addition to, and without prejudice to, the Custodian’s right to

recover such amounts pursuant to the Court’s orders or any other agreement or

entitlement.”186 Even if read in isolation, the first sentence of Paragraph 3(e) says

nothing about precluding Pincus’s other methods of reimbursement, such as under

the Appointment, Sale, and Final Orders.

For these reasons, it is clear to us that Paragraph 3(e) did not eliminate

Pincus’s right to petition for fees under, for example, Paragraph 14 of the Sale Order.

Thus, we affirm the award of $594,793 to Pincus for the fees and expenses he

incurred in responding to Shawe’s and TPG’s objections.

186 Id.; Opening Br. at 59. Shawe and TPG also allege that the Escrow was the “Default Payor” and that, as a result, and charges directly to TPG must be accompanied by a showing of bad faith. This position relies on the incorrect reading of Paragraph 3(e) discussed above and on a classification of the Escrow as the “default” source of funds that does not appear to be grounded in any order or ruling of the court. Opening Br. at 59.

44 iii. The Court of Chancery’s Award Was Reasonable

In addition to the piecemeal objections discussed above, Shawe and TPG

challenge the reasonableness of the entire $3,242,251 award on eight distinct

grounds. As an initial matter, we note that the Court of Chancery’s analysis of the

disputed fees was exhaustive. In his 135-page Fee Opinion, the Chancellor

considered objections from Shawe and TPG that numbered in the dozens. These

challenges attacked “virtually every time entry in the fee petitions” and incorporated

a seventeen-part “Tagging Guide” of purportedly “Generally Objectionable Billing

Practices.”187 Although the court generally found that Pincus’s billing was

reasonable, it sustained some of Shawe’s and TPG’s objections and rejected or

reduced Pincus’s requests in at least six areas.188 The final award was for 84 percent

of the amount Pincus initially sought.189

For simplicity, we address Shawe’s and TPG’s arguments in three buckets:

(1) challenges to Skadden’s hourly rates, (2) allegations that Skadden billed

improperly, and (3) claims that Skadden’s fees in certain areas should have been

paid by the Escrow, which was funded evenly by Shawe and Elting. As above,

187 Fee Op., 2021 WL 1711797, at *18, 31; see Ex. B to Omnibus Objection at Ex. 4, A3024. 188 Fee Op., 2021 WL 1711797, at *32 (reducing fees for clerical and administrative work); id. at *41 (excluding fees for defending confidentiality motions); id. at *43 (excluding fees for the preparation of billing statements); id. at *45 (excluding fees for the preparation of monthly update letters); id. at *46 (partially excluding fees for preparation of a proposed discharge order); id. at *47 (excluding fees for preparation of a settlement offer and reducing fees for a large Westlaw charge). 189 See Ex A. to Fee Op., Ex. D to Opening Br.

45 although we review an award of attorneys’ fees for abuse of discretion, we consider

the court’s interpretation of relevant orders and contractual provisions de novo.190

Also, we do not disturb the trial court’s factual determinations unless they are clearly

erroneous.191 Applying these standards, we conclude that Shawe and TPG have

failed to show that the trial court did not assess the reasonableness of the fees it

awarded to Pincus or that it acted arbitrarily in doing so.192

a. Skadden’s hourly rates were reasonable

When the Court of Chancery installed Pincus as Custodian, it provided in

Paragraph 11 of the Appointment Order that “[t]he fees of any counsel or advisors

. . . shall be calculated on the same hourly rates charged by such counsel or advisors

to clients represented outside this matter.”193 In the Fee Opinion, the court found as

a matter of fact that “Skadden’s rates . . . complied with this court’s orders.”194

Shawe and TPG claim that this was error because Skadden only certified that its

rates were “consistent” with those charged to other clients, not “the same.”195 Shawe

and TPG additionally argue that Skadden’s rates were “outrageous” and that a

190 Scion Breckenridge, 68 A.3d at 675. 191 Bäcker, 246 A.3d at 95. 192 Mahani, 935 A.2d at 245. 193 Appointment Order ¶ 11, A751. 194 Fee Op., 2021 WL 1711797, at *24. 195 Opening Br. at 62–64.

46 “reasonable client” discount should have been applied.196 We reject each of these

arguments about Skadden’s hourly rates.

We review the trial court’s determination that Skadden’s hourly rates were

“the same” as those it charged other clients for clear error.197 The court considered

three sources of evidence. The first was an affidavit sworn by Skadden partner

Jennifer Voss stating that the firm’s rates “are consistent with the hourly rates

charged by Skadden (including by the Delaware office of Skadden) to clients

represented outside this matter.”198 The second was a series of filings in which

“federal courts approved applications in 2019 to compensate Skadden at rates in line

with the rates [charged in this case].”199 The third consisted of filings “for twelve

other firms whose hourly rates were in line with the rates Skadden charged here.”200

These data, especially when considered alongside Voss’s affidavit, support the

determination that Skadden complied with the court’s orders regarding hourly rates.

Even if it were possible to view this evidence differently, “[w]hen there are two

permissible views of the evidence, the factfinder’s choice between them cannot be

clearly erroneous.”201 We therefore affirm the trial court’s finding that Skadden’s

rates satisfied Paragraph 11 of the Appointment Order.

196 Id. at 69. 197 Bäcker, 246 A.3d at 95. 198 Voss Aff. ¶ 6, A5066. 199 Fee Op., 2021 WL 1711797, at *24. 200 Id. 201 Bäcker, 246 A.3d at 95.

47 We turn next to the claim that “Skadden’s attorneys billed at outrageous

rates[.]”202 In determining the appropriate amount of fees to award, the trial court

found that Skadden’s rates were reasonable.203 We review this for an abuse of

discretion.204 As an initial matter, the evidence discussed above regarding the rates

charged by comparable firms in other cases runs contrary to the claim that Skadden’s

rates in this matter were “outrageous.” Moreover, although Shawe and TPG retained

an expert to challenge Skadden’s fees, the trial court observed that the expert focused

primarily on only one of the eight non-exhaustive factors articulated by Rule 1.5(a),

“the fee customarily charged in the locality for similar legal services[.]”205

Consistent with our guidance, the court considered other Rule 1.5(a) factors,

including “the amount involved and the results obtained” and “the novelty and

difficulty of the questions involved[.]”206 The court concluded that Pincus and

Skadden faced a complex task and navigated significant obstacles, further justifying

the hourly rates charged.207 In our view, the court’s reasonableness determination

was adequately supported.

202 Opening Br. at 67. 203 Fee Op., 2021 WL 1711797, at *27. 204 Mahani, 935 A.2d at 245–246. 205 Fee Op., 2021 WL 1711797, at *27. 206 Id. 207 Id.

48 Shawe and TPG also assert that Skadden should have discounted its rates.208

As above, this claim is undercut by the trial court’s finding that Skadden’s rates were

similar to what it and peer firms charged in other matters. In any case, Shawe and

TPG cite no controlling authority that requires a “reasonable client” discount. In

fact, in In re RegO, Chancellor Allen awarded fees to a court-appointed guardian ad

litem and explained that the “position that work of this sort is a quasi-public service

that deserves to be paid at a discount is without authority.”209 We agree and conclude

that none of Shawe’s and TPG’s challenges to Skadden’s hourly rates has merit.

b. Skadden did not bill improperly

Next, Shawe and TPG allege that Skadden billed improperly by producing

vague entries and charging in full for overstaffed matters and simple research tasks.

The trial court considered and rejected these challenges in calculating the overall fee

award.210 Thus, once again, we review for an abuse of discretion.211 We reject these

objections.

Shawe and TPG first contend that “many of the billing entries were far too

vague to categorize the work performed in any meaningful or accurate way.”212 Yet,

Shawe and TPG provide no examples of this in their appellate briefing. In the Fee

208 Opening Br. at 69. 209 In re RegO, 19 Del. J. Corp. L. 858, 1993 WL 488240, at *3 (Del. Ch. 1993). 210 Fee Op., 2021 WL 1711797, at *31–36. 211 Mahani, 935 A.2d at 245–246. 212 Opening Br. at 68.

49 Opinion, the Court of Chancery rejected this claim.213 Among other things, the court

noted that Shawe’s and TPG’s “Tagging Guide” appeared to be over-inclusive, as it

tagged as “vague” an entry for 12 minutes of billed time with this description:

“confer with B. Pincus re: Cypress subpoena and follow up re: subpoena.”214 Our

review of the record reveals other questionable challenges.215 For these reasons, we

reject the objection.

Next, Shawe and TPG assert that Skadden billed in full for matters that were

overstaffed. They provide two examples. In the first, Skadden sent five timekeepers

to a hearing that was attended by at least four attorneys for Shawe and TPG, as well

as at least one attorney representing Shirley Shawe.216 In the second, 12 timekeepers

billed for the response to Shawe’s and TPG’s 202-page Omnibus Objection.217 The

complaint by Shawe and TPG that Pincus billed approximately $600,000 to defend

about $240,000 in contested fees may have some intuitive appeal, but it is a concrete

cold fact that a 202-page onslaught of objections is going to force a detailed and

213 Fee Op., 2021 WL 1711797, at *32 & n.313. 214 Id. 215 See Ex. H to Omnibus Objection at 14, A2966 (classifying as “vague” an entry for 3 hours with the following description: “Attention to Cypress subpoena to Pincus; attention to court’s order [] re: confidentiality and parties’ brief re: same; draft notes for response (including defenses); review Cypress engagement letter; confer with Cypress counsel re: meet and confer; attention to CPLR and services/jurisdiction issues.”). 216 Opening Br. at 68; see Oct. 21, 2019 Ch. Ct. Tr. at 2–3, A2501–2502. As the trial court observed, this hearing—during which the court delivered an oral ruling on Pincus’s 2019 motion for contempt—“was not a minor matter.” Fee Op., 2021 WL 1711797, at *33. 217 Opening Br. at 68; see Omnibus Objection, A2862–3064.

50 exhaustive response. To restate an observation that has unique applicability to the

current dispute, “it is more time-consuming to clean up the pizza thrown at a wall

than it is to throw it.”218

Third, Shawe and TPG complain that “Skadden billed hundreds of hours and

hundreds of thousands of dollars for ‘research,’ despite the issues at hand being

relatively straightforward.”219 The Court of Chancery fully considered and rejected

this claim, and Shawe and TPG do not develop specific examples of the purported

impropriety in their appellate briefing.220 Our own review of the record confirms

that the Court of Chancery correctly dismissed this objection.221 For example, in the

Omnibus Objection, Shawe and TPG attacked Skadden “for researching ‘indemnity

rights’” for seven hours.222 Of course, Pincus’s right to indemnification was a hotly

contested issue in this case, so the suggestion that Skadden’s research into the matter

constituted an overreach pays scant heed to reality. We conclude that Shawe’s and

TPG’s challenges to Skadden’s billing practices lack merit.

c. Skadden did not improperly charge TPG instead of the Escrow

Shawe and TPG argue that Pincus and Skadden should have exclusively used

the Escrow—which was funded evenly by Shawe and Elting—to cover fees, instead

218 Fee Op., 2021 WL 1711797, at *1 (quoting Auriga Cap. Corp. v. Gatz Props., LLC, 40 A.3d 839, 882 n.184 (Del. Ch. 2012) (Strine, C.)). 219 Opening Br. at 70. 220 Fee Op., 2021 WL 1711797, at *34. 221 Id. 222 Omnibus Objection at 35–36 & n.16, A2898–2899.

51 of charging TPG directly.223 Shawe and TPG make the same argument specifically

as to the fees related to the Cypress and H.I.G. Actions.224 This question concerns

the court’s authority to grant Pincus direct reimbursement from TPG, so our review

is de novo.225 As discussed at length, provisions in the Appointment, Sale, and Final

Orders authorize Pincus to charge TPG directly for his fees, rather than the Escrow.

For example, Paragraph 14 of the Sale Order, which we affirmed, provides that

“[t]he Custodian shall be compensated at the usual hourly rate he charges [and]

reimbursed for reasonable travel and other expenses incurred in the performance of

his duties” and that “[a]ny fees and expenses approved by the Court shall be paid

promptly by the Company.”226 Although Pincus was also authorized to charge the

Escrow directly under Section 2.2 of the SPA, this was a “non-exclusive source of

funds” and Pincus adequately and repeatedly explained his reasons for charging TPG

for certain post-sale fees that had little to do with Elting’s conduct. The Court of

Chancery did not abuse its discretion in allowing him to do so.

223 Opening Br. at 69. 224 Id. 225 Scion Breckenridge, 68 A.3d at 675. 226 Sale Order ¶ 14, A770.

52 III. CONCLUSION

For the reasons stated above, we reverse and vacate the Court of Chancery’s

October 17, 2019 Contempt Order and Sanction only as they apply to Philip R.

Shawe. We affirm the Contempt Order and Sanction as they apply to TransPerfect

Global, Inc. Additionally, we affirm the court’s April 14, 2021 Discharge Order

terminating the custodianship of Robert B. Pincus. Finally, we affirm the April 30,

2021 Fee Order awarding Pincus $3,242,251 in fees, subject to the qualification that

TransPerfect Global, Inc. is the only party liable for the $1,148,291 Contempt

Sanction.